##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2005
 o
    
    Transition Report Under Section 13 or 15(d) of the Exchange Act
 For the transition period from  to
 Commission File Number 0-22439
 FISHER COMMUNICATIONS, INC.
  WASHINGTON(State or Other Jurisdiction of
Incorporation or Organization)
    
    91-0222175(I.R.S. Employer
Identification Number)
 100 Fourth Ave. N
Suite 510
Seattle, Washington 98109
 (206) 404-7000
 þ o
 þ o
 o þ




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PART IFINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3
  1.
    
    Condensed Consolidated Statements of Operations: Three and nine months ended September 30, 2005 and 2004
    
    
    32.
    
    Condensed Consolidated Balance Sheets: September 30, 2005 and December 31, 2004
    
    
    43.
    
    Condensed Consolidated Statements of Cash Flows: Nine months ended September 30, 2005 and 2004
    
    
    54.
    
    Condensed Consolidated Statements of Comprehensive Income: Three and nine months ended September 30, 2005 and 2004
    
    
    65.
    
    Notes to Condensed Consolidated Financial Statements
    
    
    7
 Item 2. Managements Discussion and Analysis of Financial Position and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures about Market Risks
    
    
    37Item 4. Controls and Procedures
    
    
    37PART II
    
    
    39OTHER INFORMATION
    
    
    39Item 1. Legal Proceedings
    
    
    39Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3. Defaults upon Senior Securities
    
    
    39Item 4. Submission of Matters to a Vote of Security Holders
    
    
    39Item 5. Other Information
    
    
    39Item 6. Exhibits
    
    
    39SIGNATURES
    
    
    41EXHIBIT INDEX
    
    
    42EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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ITEM 1  FINANCIAL STATEMENTS
 FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Nine months ended
    
    Three months endedSeptember 30
    
    September 302005
    
    2004
    
    2005
    
    2004(in thousands, except per-share amounts)(Unaudited)Revenue
    
    $
    109,883
    
    
    $
    111,517
    
    
    $
    38,804
    
    
    $
    40,251Costs and expensesCost of services sold (exclusive of depreciation
reported separately below, amounting to $8,759,
$10,343, $2,253 and $3,317, respectively)
    
    
    57,853
    
    
    
    53,449
    
    
    
    20,611
    
    
    
    19,870Selling expenses
    
    
    20,659
    
    
    
    20,857
    
    
    
    7,330
    
    
    
    7,343General and administrative expenses
    
    
    25,163
    
    
    
    26,093
    
    
    
    7,368
    
    
    
    8,117Depreciation and amortization
    
    
    10,445
    
    
    
    12,255
    
    
    
    2,694
    
    
    
    3,940114,120
    
    
    
    112,654
    
    
    
    38,003
    
    
    
    39,270Income (loss) from operations
    
    
    (4,237
    )
    
    
    (1,137
    )
    
    
    801
    
    
    
    981Net loss on derivative instruments
    
    
    
    
    
    
    (13,245
    )
    
    
    
    
    
    
    (2,700
    )Loss from extinguishment of long-term debt
    
    
    
    
    
    
    (5,034
    )
    
    
    
    
    
    
    (5,034
    )Other income, net
    
    
    2,692
    
    
    
    2,247
    
    
    
    911
    
    
    
    780Interest expense
    
    
    (10,241
    )
    
    
    (8,321
    )
    
    
    (3,466
    )
    
    
    (2,554
    )Loss from continuing operations before income taxes
    
    
    (11,786
    )
    
    
    (25,490
    )
    
    
    (1,754
    )
    
    
    (8,527
    )Benefit for federal and state income taxes
    
    
    (4,838
    )
    
    
    (9,121
    )
    
    
    (964
    )
    
    
    (3,315
    )Loss from continuing operations
    
    
    (6,948
    )
    
    
    (16,369
    )
    
    
    (790
    )
    
    
    (5,212
    )Loss from discontinued operations, net of income taxes
    
    
    
    
    
    
    (132
    )Net loss
    
    $
    (6,948
    )
    
    $
    (16,501
    )
    
    $
    (790
    )
    
    $
    (5,212
    )Loss per share:From continuing operations
    
    $
    (0.80
    )
    
    $
    (1.90
    )
    
    $
    (0.09
    )
    
    $
    (0.60
    )From discontinued operations
    
    
    
    
    
    
    (0.01
    )Net loss per share
    
    $
    (0.80
    )
    
    $
    (1.91
    )
    
    $
    (0.09
    )
    
    $
    (0.60
    )Loss per share assuming dilution:From continuing operations
    
    $
    (0.80
    )
    
    $
    (1.90
    )
    
    $
    (0.09
    )
    
    $
    (0.60
    )From discontinued operations
    
    
    
    
    
    
    (0.01
    )Net loss per share assuming dilution
    
    $
    (0.80
    )
    
    $
    (1.91
    )
    
    $
    (0.09
    )
    
    $
    (0.60
    )Weighted average shares outstanding
    
    
    8,671
    
    
    
    8,617
    
    
    
    8,695
    
    
    
    8,619Weighted average shares outstanding assuming dilution
    
    
    8,671
    
    
    
    8,617
    
    
    
    8,695
    
    
    
    8,619
  3




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30
    
    December 312005
    
    2004(in thousands, except share and per-share amounts)(Unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    9,394
    
    
    $
    16,025Receivables, net
    
    
    28,640
    
    
    
    28,539Income taxes receivable
    
    
    2,319
    
    
    
    3,355Deferred income taxes
    
    
    1,121
    
    
    
    631Prepaid expenses
    
    
    3,037
    
    
    
    3,653Television and radio broadcast rights
    
    
    8,691
    
    
    
    8,398Total current assets
    
    
    53,202
    
    
    
    60,601Marketable securities, at market value
    
    
    160,237
    
    
    
    157,102Cash value of life insurance and retirement deposits
    
    
    15,059
    
    
    
    14,971Television and radio broadcast rights
    
    
    2,097
    
    
    
    3,086Goodwill, net
    
    
    38,354
    
    
    
    38,354Intangible assets
    
    
    1,244
    
    
    
    1,244Investment in equity investee
    
    
    2,845
    
    
    
    2,825Prepaid financing fees and other assets
    
    
    6,371
    
    
    
    7,396Property, plant and equipment, net
    
    
    146,329
    
    
    
    150,293Total Assets
    
    $
    425,738
    
    
    $
    435,872LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesNotes payable
    
    $
    
    
    
    $
    53Trade accounts payable
    
    
    3,751
    
    
    
    3,755Accrued payroll and related benefits
    
    
    6,177
    
    
    
    7,331Interest payable
    
    
    539
    
    
    
    3,630Television and radio broadcast rights payable
    
    
    7,616
    
    
    
    7,419Other current liabilities
    
    
    3,994
    
    
    
    5,232Total current liabilities
    
    
    22,077
    
    
    
    27,420Long-term debt
    
    
    150,000
    
    
    
    150,000Accrued retirement benefits
    
    
    19,815
    
    
    
    18,967Deferred income taxes
    
    
    31,690
    
    
    
    36,133Other liabilities
    
    
    1,007
    
    
    
    899Commitments and ContingenciesStockholders EquityCommon stock, shares authorized 12,000,000, $1.25 par value; issued 8,695,041
in 2005 and 8,618,781 in 2004
    
    
    10,869
    
    
    
    10,773Capital in excess of par
    
    
    8,034
    
    
    
    4,535Deferred compensation
    
    
    (43
    )Accumulated other comprehensive income, net of income taxes:Unrealized gain on marketable securities
    
    
    103,492
    
    
    
    101,400Minimum pension liability
    
    
    (2,208
    )
    
    
    (2,208
    )Retained earnings
    
    
    81,005
    
    
    
    87,953Total Stockholders Equity
    
    
    201,149
    
    
    
    202,453Total Liabilities and Stockholders Equity
    
    $
    425,738
    
    
    $
    435,872
  4




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine months endedSeptember 302005
    
    2004(in thousands)(Unaudited)Cash flows from operating activitiesNet loss
    
    $
    (6,948
    )
    
    $
    (16,501
    )Adjustments to reconcile net loss to net cash provided by (used in)
operating activitiesDepreciation and amortization
    
    
    10,445
    
    
    
    12,255Deferred income taxes
    
    
    (6,033
    )
    
    
    (3,798
    )Equity in operations of equity investees
    
    
    (20
    )
    
    
    (77
    )Amortization of deferred loan costs
    
    
    488
    
    
    
    536Decrease in fair value of derivative instruments
    
    
    
    
    
    
    13,245Interest accrued on forward sale transaction
    
    
    
    
    
    
    3,564Loss on extinguishment of long-term debt
    
    
    
    
    
    
    5,034Amortization of television and radio broadcast rights
    
    
    17,745
    
    
    
    16,418Payments for television and radio broadcast rights
    
    
    (16,840
    )
    
    
    (15,703
    )Other
    
    
    389
    
    
    
    208Change in operating assets and liabilitiesReceivables
    
    
    (1,047
    )
    
    
    (1,001
    )Prepaid expenses
    
    
    616
    
    
    
    578Cash value of life insurance and retirement deposits
    
    
    (88
    )
    
    
    (20
    )Other assets
    
    
    (14
    )
    
    
    (106
    )Trade accounts payable, accrued payroll and related benefits, interest
payable, and other current liabilities
    
    
    (5,486
    )
    
    
    (764
    )Income taxes receivable and payable
    
    
    1,036
    
    
    
    (11,034
    )Accrued retirement benefits
    
    
    848
    
    
    
    1,009Other liabilities
    
    
    94
    
    
    
    (540
    )Net cash provided by (used in) operating activities
    
    
    (4,815
    )
    
    
    3,303Cash flows from investing activitiesProceeds from collection of notes receivable
    
    
    1,585
    
    
    
    428Proceeds from sale of marketable securities
    
    
    247Purchase of property, plant and equipment
    
    
    (6,576
    )
    
    
    (3,075
    )Net cash used in investing activities
    
    
    (4,744
    )
    
    
    (2,647
    )Cash flows from financing activitiesPayments under notes payable
    
    
    (53
    )
    
    
    (662
    )Borrowings under borrowing agreements
    
    
    
    
    
    
    161,000Payments on borrowing agreements
    
    
    
    
    
    
    (142,709
    )Payments to terminate forward transaction tranche
    
    
    
    
    
    
    (5,519
    )Payment of deferred loan costs
    
    
    (87
    )
    
    
    (5,240
    )Proceeds from exercise of stock options
    
    
    3,068
    
    
    
    427Net cash provided by financing activities
    
    
    2,928
    
    
    
    7,297Net increase (decrease) in cash and cash equivalents
    
    
    (6,631
    )
    
    
    7,953Cash and cash equivalents, beginning of period
    
    
    16,025
    
    
    
    12,996Cash and cash equivalents, end of period
    
    $
    9,394
    
    
    $
    20,949
  5




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Nine months ended
    
    Three months endedSeptember 30
    
    September 302005
    
    2004
    
    2005
    
    2004(in thousands)(Unaudited)Net loss
    
    $
    (6,948
    )
    
    $
    (16,501
    )
    
    $
    (790
    )
    
    $
    (5,212
    )Other comprehensive income (loss):Unrealized gain on marketable securities
    
    
    3,382
    
    
    
    20,176
    
    
    
    (2,912
    )
    
    
    4,953Effect of income taxes
    
    
    (1,184
    )
    
    
    (7,062
    )
    
    
    1,020
    
    
    
    (1,733
    )Less: Reclassification adjustment for gains included
in net loss
    
    
    (106
    )2,092
    
    
    
    13,114
    
    
    
    (1,892
    )
    
    
    3,220Comprehensive loss
    
    $
    (4,856
    )
    
    $
    (3,387
    )
    
    $
    (2,682
    )
    
    $
    (1,992
    )
  6




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##### Table of Contents



1.
    
    Basis of Presentation
  2.
    
    Recent Accounting Pronouncements
    7




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##### Table of Contents



3.
    
    Discontinued Operations
  4.
    
    Senior Notes and Senior Credit Facility
   Year
    
    Percentage2009
    
    
    104.3125
    %2010
    
    
    102.8750
    %2011
    
    
    101.4375
    %2012 and thereafter
    
    
    100.0000
    %
   
    
    incur additional indebtedness;
    
    make certain asset dispositions;
    
    make investments or other restricted payments;
    
    pay dividends or make other distributions on, redeem or repurchase, capital stock;
    
    issue capital stock of the Companys restricted subsidiaries;
    
    enter into transactions with affiliates or related persons;
    
    incur certain liens on assets to secure debt; and
    
    enter into a merger, sale or consolidation.
  8




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##### Table of Contents



5.
    
    Derivative Instruments
     6.
    
    Television and Radio Broadcast Rights and Other Broadcast Commitments
   9




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##### Table of Contents



7.
    
    Retirement Benefits
    Nine months ended
    
    Three months endedSeptember 30
    
    September 302005
    
    2004
    
    2005
    
    2004Service cost
    
    $
    80
    
    
    $
    218
    
    
    $
    
    
    
    $
    73Interest cost
    
    
    781
    
    
    
    822
    
    
    
    247
    
    
    
    274Amortization of transition obligation
    
    
    52
    
    
    
    78
    
    
    
    
    
    
    
    26Amortization of loss
    
    
    195
    
    
    
    160
    
    
    
    72
    
    
    
    53Net periodic pension cost
    
    
    1,108
    
    
    
    1,278
    
    
    
    319
    
    
    
    426Curtailment loss recognized
    
    
    451
    
    
    
    
    
    
    
    Total pension cost
    
    $
    1,559
    
    
    $
    1,278
    
    
    $
    319
    
    
    $
    426
  2005
    
    2004Discount Rate
    
    
    5.02%  5.74
    %
    
    
    6.25
    %Rate of Compensation increase
    
    
    0.00%  3.00
    %
    
    
    3.00
    %
  8.
    
    Income (loss) Per Share
  10




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##### Table of Contents



9.
    
    Stock-Based Compensation
   Nine months ended
    
    Three months endedSeptember 30
    
    September 302005
    
    2004
    
    2005
    
    2004Net loss, as reported
    
    $
    (6,948
    )
    
    $
    (16,501
    )
    
    $
    (790
    )
    
    $
    (5,212
    )Add stock-based employee compensation expense
included in net loss as reported
    
    
    197
    
    
    $
    41
    
    
    
    
    
    
    $
    13Deduct total stock-based employee compensation expense
determined under the fair value based method
for all awards, net of related income tax effect
    
    
    (266
    )
    
    
    (893
    )
    
    
    (85
    )
    
    
    (208
    )Adjusted net loss
    
    $
    (7,017
    )
    
    $
    (17,353
    )
    
    $
    (875
    )
    
    $
    (5,407
    )Loss per share:As reported
    
    $
    (0.80
    )
    
    $
    (1.91
    )
    
    $
    (0.09
    )
    
    $
    (0.60
    )Adjusted
    
    $
    (0.81
    )
    
    $
    (2.01
    )
    
    $
    (0.10
    )
    
    $
    (0.63
    )Loss per share assuming dilution:As reported
    
    $
    (0.80
    )
    
    $
    (1.91
    )
    
    $
    (0.09
    )
    
    $
    (0.60
    )Adjusted
    
    $
    (0.81
    )
    
    $
    (2.01
    )
    
    $
    (0.10
    )
    
    $
    (0.63
    )
  11




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10.
    
    Segment Information
   Nine Months
    
    
    Three MonthsEnded September 30
    
    
    Ended September 302005
    
    
    2004
    
    
    2005
    
    
    2004Television
    
    $
    65,883
    
    
    $
    70,002
    
    
    $
    21,687
    
    
    $
    23,896
    

Radio
    
    
    38,119
    
    
    
    38,585
    
    
    
    15,127
    
    
    
    15,360Fisher Plaza
    
    
    5,998
    
    
    
    3,014
    
    
    
    2,002
    
    
    
    1,036Corporate and eliminations
    
    
    (117
    )
    
    
    (84
    )
    
    
    (12
    )
    
    
    (41
    )Continuing operations
    
    $
    109,883
    
    
    $
    111,517
    
    
    $
    38,804
    
    
    $
    40,251
  Nine months
    
    
    Three monthsended September 30
    
    
    ended September 302005
    
    
    2004
    
    
    2005
    
    
    2004Television
    
    $
    3,708
    
    
    $
    8,050
    
    
    $
    2,273
    
    
    $
    2,509Radio
    
    
    (28
    )
    
    
    593
    
    
    
    409
    
    
    
    (105
    )Fisher Plaza
    
    
    172
    
    
    
    (2,304
    )
    
    
    70
    
    
    
    (547
    )Corporate and eliminations
    
    
    (5,397
    )
    
    
    (23,508
    )
    
    
    (1,040
    )
    
    
    (7,830
    )Total segment income (loss) from continuing
operations before interest and income taxes
    
    
    (1,545
    )
    
    
    (17,169
    )
    
    
    1,712
    
    
    
    (5,973
    )Discontinued operations before income taxes
    
    
    
    
    
    
    (207
    )$
    (1,545
    )
    
    $
    (17,376
    )
    
    $
    1,712
    
    
    $
    (5,973
    )
  Nine months
    
    
    Three monthsended September 30
    
    
    ended September 302005
    
    
    2004
    
    
    2005
    
    
    2004Total segment income (loss) from continuing
operations before interest and income taxes
    
    $
    (1,545
    )
    
    $
    (17,169
    )
    
    $
    1,712
    
    
    $
    (5,973
    )Interest expense, net
    
    
    (10,241
    )
    
    
    (8,321
    )
    
    
    (3,466
    )
    
    
    (2,554
    )Consolidated loss from continuing operations
before income taxes
    
    $
    (11,786
    )
    
    $
    (25,490
    )
    
    $
    (1,754
    )
    
    $
    (8,527
    )
 12




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##### Table of Contents



September 30,
    
    
    December 31,2005
    
    
    2004Total assetsTelevision
    
    $
    85,379
    
    
    $
    93,799Radio
    
    
    42,747
    
    
    
    44,048Fisher Plaza
    
    
    120,112
    
    
    
    122,579Corporate and eliminations
    
    
    177,500
    
    
    
    175,446Continuing operations
    
    $
    425,738
    
    
    $
    435,872
  11.
    
    Subsequent Event
  12.
    
    Financial Information for Guarantors
   13




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the nine months ended September 30, 2005
 Wholly
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    110,014
    
    
    $
    (131
    )
    
    $
    109,883Costs and expensesCost of services sold
    
    
    
    
    
    
    56,685
    
    
    
    1,168
    
    
    
    57,853Selling expenses
    
    
    
    
    
    
    20,659
    
    
    
    
    
    
    
    20,659General and administrative expenses
    
    
    7,569
    
    
    
    18,893
    
    
    
    (1,299
    )
    
    
    25,163Depreciation and amortization
    
    
    183
    
    
    
    10,262
    
    
    
    
    
    
    
    10,4457,752
    
    
    
    106,499
    
    
    
    (131
    )
    
    
    114,120Income (loss) from operations
    
    
    (7,752
    )
    
    
    3,515
    
    
    
    
    
    
    
    (4,237
    )Other income, net
    
    
    2,164
    
    
    
    528
    
    
    
    
    
    
    
    2,692Equity in income of subsidiaries
    
    
    2,610
    
    
    
    
    
    
    
    (2,610
    )
    
    
    Interest expense
    
    
    (10,241
    )
    
    
    
    
    
    
    
    
    
    
    (10,241
    )Income (loss) from continuing operations before income taxes
    
    
    (13,219
    )
    
    
    4,043
    
    
    
    (2,610
    )
    
    
    (11,786
    )Provision (benefit) for federal and state income taxes
    
    
    (6,271
    )
    
    
    1,433
    
    
    
    
    
    
    
    (4,838
    )Net income (loss)
    
    $
    (6,948
    )
    
    $
    2,610
    
    
    $
    (2,610
    )
    
    $
    (6,948
    )
 14




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the nine months ended September 30, 2004
 Wholly
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    111,681
    
    
    $
    (164
    )
    
    $
    111,517Costs and expensesCost of services sold
    
    
    
    
    
    
    52,344
    
    
    
    1,105
    
    
    
    53,449Selling expenses
    
    
    
    
    
    
    20,857
    
    
    
    
    
    
    
    20,857General and administrative expenses
    
    
    7,292
    
    
    
    20,070
    
    
    
    (1,269
    )
    
    
    26,093Depreciation and amortization
    
    
    124
    
    
    
    12,131
    
    
    
    
    
    
    
    12,2557,416
    
    
    
    105,402
    
    
    
    (164
    )
    
    
    112,654Income (loss) from operations
    
    
    (7,416
    )
    
    
    6,279
    
    
    
    
    
    
    
    (1,137
    )Net gain (loss) on derivative instruments
    
    
    (14,152
    )
    
    
    907
    
    
    
    
    
    
    
    (13,245
    )Loss from extinguishment of long-term debt
    
    
    (3,170
    )
    
    
    (1,864
    )
    
    
    
    
    
    
    (5,034
    )Other income, net
    
    
    1,640
    
    
    
    607
    
    
    
    
    
    
    
    2,247Equity in income of subsidiaries
    
    
    764
    
    
    
    
    
    
    
    (764
    )Interest expense
    
    
    (4,021
    )
    
    
    (4,300
    )
    
    
    
    
    
    
    (8,321
    )Income (loss) from continuing operations
before income taxes
    
    
    (26,355
    )
    
    
    1,629
    
    
    
    (764
    )
    
    
    (25,490
    )Provision (benefit) for federal and state income taxes
    
    
    (9,854
    )
    
    
    733
    
    
    
    
    
    
    
    (9,121
    )Income (loss) from continuing operations
    
    
    (16,501
    )
    
    
    896
    
    
    
    (764
    )
    
    
    (16,369
    )Loss from discontinued operations net of income taxes
    
    
    
    
    
    
    (132
    )
    
    
    
    
    
    
    (132
    )Net income (loss)
    
    $
    (16,501
    )
    
    $
    764
    
    
    $
    (764
    )
    
    $
    (16,501
    )
 15




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the three months ended September 30, 2005
 Wholly
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    38,821
    
    
    $
    (17
    )
    
    $
    38,804Costs and expensesCost of services sold
    
    
    
    
    
    
    20,221
    
    
    
    390
    
    
    
    20,611Selling expenses
    
    
    
    
    
    
    7,330
    
    
    
    
    
    
    
    7,330General and administrative expenses
    
    
    1,883
    
    
    
    5,892
    
    
    
    (407
    )
    
    
    7,368Depreciation and amortization
    
    
    49
    
    
    
    2,645
    
    
    
    
    
    
    
    2,6941,932
    
    
    
    36,088
    
    
    
    (17
    )
    
    
    38,003Income (loss) from operations
    
    
    (1,932
    )
    
    
    2,733
    
    
    
    
    
    
    
    801Other income, net
    
    
    759
    
    
    
    152
    
    
    
    
    
    
    
    911Equity in income of subsidiaries
    
    
    1,833
    
    
    
    
    
    
    
    (1,833
    )
    
    
    Interest expense
    
    
    (3,466
    )
    
    
    
    
    
    
    
    
    
    
    (3,466
    )Income (loss) from continuing operations before income taxes
    
    
    (2,806
    )
    
    
    2,885
    
    
    
    (1,833
    )
    
    
    (1,754
    )Provision (benefit) for federal and state income taxes
    
    
    (2,016
    )
    
    
    1,052
    
    
    
    
    
    
    
    (964
    )Net income (loss)
    
    $
    (790
    )
    
    $
    1,833
    
    
    $
    (1,833
    )
    
    $
    (790
    )
 16




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the three months ended September 30, 2004
 Wholly
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    
    
    
    
    $
    40,307
    
    
    $
    (56
    )
    
    $
    40,251Costs and expensesCost of services sold
    
    
    
    
    
    
    19,500
    
    
    
    370
    
    
    
    19,870Selling expenses
    
    
    
    
    
    
    7,343
    
    
    
    
    
    
    
    7,343General and administrative expenses
    
    
    2,306
    
    
    
    6,237
    
    
    
    (426
    )
    
    
    8,117Depreciation and amortization
    
    
    41
    
    
    
    3,899
    
    
    
    
    
    
    
    3,9402,347
    
    
    
    36,979
    
    
    
    (56
    )
    
    
    39,270Income (loss) from operations
    
    
    (2,347
    )
    
    
    3,328
    
    
    
    
    
    
    
    981Net loss on derivative instruments
    
    
    (2,700
    )
    
    
    
    
    
    
    
    
    
    
    (2,700
    )Loss from extinguishment of long-term debt
    
    
    (3,170
    )
    
    
    (1,864
    )
    
    
    
    
    
    
    (5,034
    )Other income, net
    
    
    558
    
    
    
    222
    
    
    
    
    
    
    
    780Equity in income of subsidiaries
    
    
    316
    
    
    
    
    
    
    
    (316
    )Interest expense
    
    
    (1,434
    )
    
    
    (1,120
    )
    
    
    
    
    
    
    (2,554
    )Income (loss) before income taxes
    
    
    (8,777
    )
    
    
    566
    
    
    
    (316
    )
    
    
    (8,527
    )Provision (benefit) for federal and state income taxes
    
    
    (3,565
    )
    
    
    250
    
    
    
    
    
    
    
    (3,315
    )Net income (loss)
    
    $
    (5,212
    )
    
    $
    316
    
    
    $
    (316
    )
    
    $
    (5,212
    )
 17




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of September 30, 2005
 Wholly
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    1,264
    
    
    $
    8,130
    
    
    $
    
    
    
    $
    9,394Receivables, net
    
    
    
    
    
    
    28,640
    
    
    
    
    
    
    
    28,640Due from affiliate
    
    
    
    
    
    
    4,888
    
    
    
    (4,888
    )
    
    
    Income taxes receivable
    
    
    3,618
    
    
    
    
    
    
    
    (1,299
    )
    
    
    2,319Deferred income taxes
    
    
    111
    
    
    
    1,010
    
    
    
    
    
    
    
    1,121Prepaid expenses
    
    
    203
    
    
    
    2,834
    
    
    
    
    
    
    
    3,037Television and radio broadcast rights
    
    
    
    
    
    
    8,691
    
    
    
    
    
    
    
    8,691Total current assets
    
    
    5,196
    
    
    
    54,193
    
    
    
    (6,187
    )
    
    
    53,202Marketable securities, at market value
    
    
    160,237
    
    
    
    
    
    
    
    
    
    
    
    160,237Investment in consolidated subsidiaries
    
    
    220,916
    
    
    
    
    
    
    
    (220,916
    )
    
    
    Cash value of life insurance and retirement deposits
    
    
    5,008
    
    
    
    10,051
    
    
    
    
    
    
    
    15,059Television and radio broadcast rights
    
    
    
    
    
    
    2,097
    
    
    
    
    
    
    
    2,097Goodwill, net
    
    
    
    
    
    
    38,354
    
    
    
    
    
    
    
    38,354Intangible assets
    
    
    
    
    
    
    1,244
    
    
    
    
    
    
    
    1,244Investments in equity investee
    
    
    
    
    
    
    2,845
    
    
    
    
    
    
    
    2,845Deferred income taxes
    
    
    
    
    
    
    4,757
    
    
    
    (4,757
    )
    
    
    Prepaid financing fees and other assets
    
    
    5,377
    
    
    
    994
    
    
    
    
    
    
    
    6,371Property, plant and equipment, net
    
    
    889
    
    
    
    145,440
    
    
    
    
    
    
    
    146,329Total Assets
    
    $
    397,623
    
    
    $
    259,975
    
    
    $
    (231,860
    )
    
    $
    425,738LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesNotes payable
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Trade accounts payable
    
    
    454
    
    
    
    3,297
    
    
    
    
    
    
    
    3,751Payable to affiliate
    
    
    4,888
    
    
    
    
    
    
    
    (4,888
    )
    
    
    Accrued payroll and related benefits
    
    
    726
    
    
    
    5,451
    
    
    
    
    
    
    
    6,177Television and radio broadcast rights payable
    
    
    
    
    
    
    7,616
    
    
    
    
    
    
    
    7,616Income taxes payable
    
    
    
    
    
    
    1,299
    
    
    
    (1,299
    )
    
    
    Other current liabilities
    
    
    1,878
    
    
    
    2,655
    
    
    
    
    
    
    
    4,533Total current liabilities
    
    
    7,946
    
    
    
    20,318
    
    
    
    (6,187
    )
    
    
    22,077Long-term debt
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Accrued retirement benefits
    
    
    2,081
    
    
    
    17,734
    
    
    
    
    
    
    
    19,815Deferred income taxes
    
    
    36,447
    
    
    
    
    
    
    
    (4,757
    )
    
    
    31,690Other liabilities
    
    
    
    
    
    
    1,007
    
    
    
    
    
    
    
    1,007Stockholders EquityCommon stock
    
    
    10,869
    
    
    
    1,131
    
    
    
    (1,131
    )
    
    
    10,869Capital in excess of par
    
    
    8,034
    
    
    
    164,234
    
    
    
    (164,234
    )
    
    
    8,034Deferred compensation
    
    
    (43
    )
    
    
    
    
    
    
    
    
    
    
    (43
    )Accumulated other comprehensive income, net of income taxes:Unrealized gain on marketable securities
    
    
    103,492
    
    
    
    
    
    
    
    
    
    
    
    103,492Minimum pension liability
    
    
    (2,208
    )
    
    
    (2,208
    )
    
    
    2,208
    
    
    
    (2,208
    )Retained earnings
    
    
    81,005
    
    
    
    57,759
    
    
    
    (57,759
    )
    
    
    81,005Total Stockholders Equity
    
    
    201,149
    
    
    
    220,916
    
    
    
    (220,916
    )
    
    
    201,149Total Liabilities and Stockholders Equity
    
    $
    397,623
    
    
    
    $259,975
    
    
    $
    (231,860
    )
    
    $
    425,738
 18




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of December 31, 2004
 Wholly
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    1,007
    
    
    $
    15,018
    
    
    $
    
    
    
    $
    16,025Receivables, net
    
    
    6
    
    
    
    28,533
    
    
    
    
    
    
    
    28,539Due from affiliate
    
    
    10,379
    
    
    
    
    
    
    
    (10,379
    )
    
    
    Income taxes receivable
    
    
    5,234
    
    
    
    
    
    
    
    (1,879
    )
    
    
    3,355Deferred income taxes
    
    
    92
    
    
    
    539
    
    
    
    
    
    
    
    631Prepaid expenses
    
    
    222
    
    
    
    3,431
    
    
    
    
    
    
    
    3,653Television and radio broadcast rights
    
    
    
    
    
    
    8,398
    
    
    
    
    
    
    
    8,398Total current assets
    
    
    16,940
    
    
    
    55,919
    
    
    
    (12,258
    )
    
    
    60,601Marketable securities, at market value
    
    
    156,925
    
    
    
    177
    
    
    
    
    
    
    
    157,102Investment in consolidated subsidiaries
    
    
    218,380
    
    
    
    
    
    
    
    (218,380
    )
    
    
    Cash value of life insurance and retirement deposits
    
    
    5,454
    
    
    
    9,517
    
    
    
    
    
    
    
    14,971Television and radio broadcast rights
    
    
    
    
    
    
    3,086
    
    
    
    
    
    
    
    3,086Goodwill, net
    
    
    
    
    
    
    38,354
    
    
    
    
    
    
    
    38,354Intangible assets
    
    
    
    
    
    
    1,244
    
    
    
    
    
    
    
    1,244Investments in equity investee
    
    
    
    
    
    
    2,825
    
    
    
    
    
    
    
    2,825Deferred income taxes
    
    
    
    
    
    
    6,125
    
    
    
    (6,125
    )
    
    
    Prepaid financing fees and and other assets
    
    
    5,995
    
    
    
    1,401
    
    
    
    
    
    
    
    7,396Property, plant and equipment, net
    
    
    838
    
    
    
    149,455
    
    
    
    
    
    
    
    150,293Total Assets
    
    $
    404,532
    
    
    $
    268,103
    
    
    $
    (236,763
    )
    
    $
    435,872LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesNotes payable
    
    $
    44
    
    
    $
    9
    
    
    $
    
    
    
    $
    53Trade accounts payable
    
    
    633
    
    
    
    3,122
    
    
    
    
    
    
    
    3,755Payable to affiliate
    
    
    
    
    
    
    10,379
    
    
    
    (10,379
    )
    
    
    Accrued payroll and related benefits
    
    
    1,068
    
    
    
    6,263
    
    
    
    
    
    
    
    7,331Television and radio broadcast rights payable
    
    
    
    
    
    
    7,419
    
    
    
    
    
    
    
    7,419Income taxes payable
    
    
    
    
    
    
    1,879
    
    
    
    (1,879
    )
    
    
    Other current liabilities
    
    
    6,594
    
    
    
    2,268
    
    
    
    
    
    
    
    8,862Total current liabilities
    
    
    8,339
    
    
    
    31,339
    
    
    
    (12,258
    )
    
    
    27,420Long-term debt
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Accrued retirement benefits
    
    
    1,482
    
    
    
    17,485
    
    
    
    
    
    
    
    18,967Deferred income taxes
    
    
    42,258
    
    
    
    
    
    
    
    (6,125
    )
    
    
    36,133Other liabilities
    
    
    
    
    
    
    899
    
    
    
    
    
    
    
    899Stockholders EquityCommon stock
    
    
    10,773
    
    
    
    1,131
    
    
    
    (1,131
    )
    
    
    10,773Capital in excess of par
    
    
    4,535
    
    
    
    164,234
    
    
    
    (164,234
    )
    
    
    4,535Accumulated other comprehensive income, net of income taxes:Unrealized gain on marketable securities
    
    
    101,400
    
    
    
    75
    
    
    
    (75
    )
    
    
    101,400Minimum pension liability
    
    
    (2,208
    )
    
    
    (2,208
    )
    
    
    2,208
    
    
    
    (2,208
    )Retained earnings
    
    
    87,953
    
    
    
    55,148
    
    
    
    (55,148
    )
    
    
    87,953Total Stockholders Equity
    
    
    202,453
    
    
    
    218,380
    
    
    
    (218,380
    )
    
    
    202,453Total Liabilities and Stockholders Equity
    
    $
    404,532
    
    
    $
    268,103
    
    
    $
    (236,763
    )
    
    $
    435,872
 19




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Cash Flows
for the nine months ended September 30, 2005
 Wholly
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Net cash used in operating activities
    
    $
    (2,520
    )
    
    $
    (2,295
    )
    
    $
    
    
    
    $
    (4,815
    )Cash flows from investing activitiesProceeds from collection of note receivable
    
    
    
    
    
    
    1,585
    
    
    
    
    
    
    
    1,585Proceeds from sale of marketable securities
    
    
    73
    
    
    
    174
    
    
    
    
    
    
    
    247Purchase of property, plant and equipment
    
    
    (233
    )
    
    
    (6,343
    )
    
    
    
    
    
    
    (6,576
    )Net cash used in investing activities
    
    
    (160
    )
    
    
    (4,584
    )
    
    
    
    
    
    
    (4,744
    )Cash flows from financing activitiesPayments under notes payable
    
    
    (44
    )
    
    
    (9
    )
    
    
    
    
    
    
    (53
    )Payment of deferred loan costs
    
    
    (87
    )
    
    
    
    
    
    
    
    
    
    
    (87
    )Proceeds from exercise of stock options
    
    
    3,068
    
    
    
    
    
    
    
    
    
    
    
    3,068Net cash provided by (used in) financing activities
    
    
    2,937
    
    
    
    (9
    )
    
    
    
    
    
    
    2,928Net decrease in cash and cash equivalents
    
    
    257
    
    
    
    (6,888
    )
    
    
    
    
    
    
    (6,631
    )Cash and cash equivalents, beginning of period
    
    
    1,007
    
    
    
    15,018
    
    
    
    
    
    
    
    16,025Cash and cash equivalents, end of period
    
    $
    1,264
    
    
    $
    8,130
    
    
    $
    
    
    
    $
    9,394
 20




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Cash Flows
for the nine months ended September 30, 2004
 Wholly
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Net cash (used in) provided by operating activities
    
    $
    (2,308
    )
    
    $
    13,111
    
    
    $
    (7,500
    )
    
    $
    3,303Cash flows from investing activitiesProceeds from collection of notes receivable
    
    
    
    
    
    
    428
    
    
    
    
    
    
    
    428Purchase of property, plant and equipment
    
    
    (402
    )
    
    
    (2,673
    )
    
    
    
    
    
    
    (3,075
    )Net cash used in investing activities
    
    
    (402
    )
    
    
    (2,245
    )
    
    
    
    
    
    
    (2,647
    )Cash flows from financing activitiesNet payments under notes payable
    
    
    (662
    )
    
    
    
    
    
    
    
    
    
    
    (662
    )Borrowings under borrowing agreements
    
    
    158,000
    
    
    
    3,000
    
    
    
    
    
    
    
    161,000Payments on borrowing agreements
    
    
    (142,709
    )
    
    
    
    
    
    
    
    
    
    
    (142,709
    )Payment to terminate forward transaction tranche and
additional amount to retire outstanding balances
    
    
    (5,519
    )
    
    
    
    
    
    
    
    
    
    
    (5,519
    )Payment of deferred loan costs
    
    
    (5,073
    )
    
    
    (167
    )
    
    
    
    
    
    
    (5,240
    )Dividends Paid
    
    
    
    
    
    
    (7,500
    )
    
    
    7,500Proceeds from exercise of stock options
    
    
    427
    
    
    
    
    
    
    
    
    
    
    
    427Net cash provided by (used in) financing activities
    
    
    4,464
    
    
    
    (4,667
    )
    
    
    7,500
    
    
    
    7,297Net increase in cash and cash equivalents
    
    
    1,754
    
    
    
    6,199
    
    
    
    
    
    
    
    7,953Cash and cash equivalents, beginning of period
    
    
    1,639
    
    
    
    11,357
    
    
    
    
    
    
    
    12,996Cash and cash equivalents, end of period
    
    $
    3,393
    
    
    $
    17,556
    
    
    $
    
    
    
    $
    20,949
 21




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##### Table of Contents



ITEM 2   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
 The following discussion and analysis should be read in conjunction with the Financial Statements
and related Notes thereto included elsewhere in this quarterly report on Form 10-Q . Some of the
statements in this quarterly report are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages
containing verbs such as `aims, anticipates, believes, estimates, expects, hopes, intends, plans,
predicts, projects or targets or nouns corresponding to such verbs. Forward-looking statements
also include any other passages that are primarily relevant to expected future events or that can
only be fully evaluated by events that will occur in the future. There are many risks and
uncertainties that could cause actual results to differ materially from those predicted in our
forward-looking statements, including, without limitation, those factors discussed under the
caption Additional Factors That May Affect Our Business, Financial Condition And Future Results.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date of this report. We undertake no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently arise. Readers are
urged to carefully review and consider the various disclosures made in this report and in our other
reports filed with the Securities and Exchange Commission that attempt to advise interested parties
of the risks and factors that may affect our business, prospects and results of operations. As used
herein, unless the context requires otherwise, when we say we, us, our, or the Company, we
are referring to Fisher Communications, Inc. and its consolidated subsidiaries.
      22




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
   CONSOLIDATED RESULTS OF OPERATIONS
  23




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##### Table of Contents



Nine Months
    
    
    
    
    
    
    
    
    
    
    Three monthsEnded September 30,
    
    
    Variance
    
    
    Ended September 30,
    
    
    Variance2005
    
    
    2004
    
    
    $
    
    
    %
    
    
    2005
    
    
    2004
    
    
    $
    
    
    %(dollars in thousands)(Unaudited)RevenueTelevision
    
    $
    65,883
    
    
    $
    70,002
    
    
    $
    (4,119
    )
    
    
    -5.9
    %
    
    $
    21,687
    
    
    $
    23,896
    
    
    $
    (2,209
    )
    
    
    -9.2
    %Radio
    
    
    38,119
    
    
    
    38,585
    
    
    
    (466
    )
    
    
    -1.2
    %
    
    
    15,127
    
    
    
    15,360
    
    
    
    (233
    )
    
    
    -1.5
    %Fisher Plaza
    
    
    5,998
    
    
    
    3,014
    
    
    
    2,984
    
    
    
    99.0
    %
    
    
    2,002
    
    
    
    1,036
    
    
    
    966
    
    
    
    93.2
    %Corporate and eliminations
    
    
    (117
    )
    
    
    (84
    )
    
    
    (33
    )
    
    
    
    
    
    
    (12
    )
    
    
    (41
    )
    
    
    29Consolidated
    
    
    109,883
    
    
    
    111,517
    
    
    
    (1,634
    )
    
    
    -1.5
    %
    
    
    38,804
    
    
    
    40,251
    
    
    
    (1,447
    )
    
    
    -3.6
    %Cost of services soldTelevision
    
    
    34,483
    
    
    
    31,830
    
    
    
    2,653
    
    
    
    8.3
    %
    
    
    11,076
    
    
    
    10,710
    
    
    
    366
    
    
    
    3.4
    %Radio
    
    
    20,197
    
    
    
    19,514
    
    
    
    683
    
    
    
    3.5
    %
    
    
    8,430
    
    
    
    8,693
    
    
    
    (263
    )
    
    
    -3.0
    %Fisher Plaza
    
    
    2,003
    
    
    
    889
    
    
    
    1,114
    
    
    
    125.3
    %
    
    
    715
    
    
    
    85
    
    
    
    630
    
    
    
    741.2
    %Corporate and eliminations
    
    
    1,170
    
    
    
    1,216
    
    
    
    (46
    )
    
    
    -3.8
    %
    
    
    390
    
    
    
    382
    
    
    
    8
    
    
    
    2.1
    %Consolidated
    
    
    57,853
    
    
    
    53,449
    
    
    
    4,404
    
    
    
    8.2
    %
    
    
    20,611
    
    
    
    19,870
    
    
    
    741
    
    
    
    3.7
    %Selling expensesTelevision
    
    
    9,024
    
    
    
    8,788
    
    
    
    236
    
    
    
    2.7
    %
    
    
    3,091
    
    
    
    3,039
    
    
    
    52
    
    
    
    1.7
    %Radio
    
    
    11,315
    
    
    
    11,320
    
    
    
    (5
    )
    
    
    0.0
    %
    
    
    4,132
    
    
    
    4,068
    
    
    
    64
    
    
    
    1.6
    %Fisher Plaza
    
    
    320
    
    
    
    749
    
    
    
    (429
    )
    
    
    -57.3
    %
    
    
    107
    
    
    
    236
    
    
    
    (129
    )
    
    
    -54.7
    %Consolidated
    
    
    20,659
    
    
    
    20,857
    
    
    
    (198
    )
    
    
    -0.9
    %
    
    
    7,330
    
    
    
    7,343
    
    
    
    (13
    )
    
    
    -0.2
    %General and administrative expensesTelevision
    
    
    12,445
    
    
    
    12,786
    
    
    
    (341
    )
    
    
    -2.7
    %
    
    
    3,808
    
    
    
    3,893
    
    
    
    (85
    )
    
    
    -2.2
    %Radio
    
    
    5,691
    
    
    
    5,858
    
    
    
    (167
    )
    
    
    -2.9
    %
    
    
    1,843
    
    
    
    1,860
    
    
    
    (17
    )
    
    
    -0.9
    %Fisher Plaza
    
    
    687
    
    
    
    757
    
    
    
    (70
    )
    
    
    -9.2
    %
    
    
    292
    
    
    
    269
    
    
    
    23
    
    
    
    8.6
    %Corporate and eliminations
    
    
    6,340
    
    
    
    6,692
    
    
    
    (352
    )
    
    
    -5.3
    %
    
    
    1,425
    
    
    
    2,095
    
    
    
    (670
    )
    
    
    -32.0
    %Consolidated
    
    
    25,163
    
    
    
    26,093
    
    
    
    (930
    )
    
    
    -3.6
    %
    
    
    7,368
    
    
    
    8,117
    
    
    
    (749
    )
    
    
    -9.2
    %Depreciation and amortizationTelevision
    
    
    6,397
    
    
    
    8,169
    
    
    
    (1,772
    )
    
    
    -21.7
    %
    
    
    1,489
    
    
    
    2,613
    
    
    
    (1,124
    )
    
    
    -43.0
    %Radio
    
    
    1,063
    
    
    
    1,143
    
    
    
    (80
    )
    
    
    -7.0
    %
    
    
    336
    
    
    
    375
    
    
    
    (39
    )
    
    
    -10.4
    %Fisher Plaza
    
    
    2,800
    
    
    
    2,816
    
    
    
    (16
    )
    
    
    -0.6
    %
    
    
    819
    
    
    
    912
    
    
    
    (93
    )
    
    
    -10.2
    %Corporate and eliminations
    
    
    185
    
    
    
    127
    
    
    
    58
    
    
    
    45.7
    %
    
    
    50
    
    
    
    40
    
    
    
    10
    
    
    
    25.0
    %Consolidated
    
    
    10,445
    
    
    
    12,255
    
    
    
    (1,810
    )
    
    
    -14.8
    %
    
    
    2,694
    
    
    
    3,940
    
    
    
    (1,246
    )
    
    
    -31.6
    %Income (loss) from operationsTelevision
    
    
    3,534
    
    
    
    8,429
    
    
    
    (4,895
    )
    
    
    
    
    
    
    2,223
    
    
    
    3,641
    
    
    
    (1,418
    )Radio
    
    
    (147
    )
    
    
    750
    
    
    
    (897
    )
    
    
    
    
    
    
    386
    
    
    
    364
    
    
    
    22Fisher Plaza
    
    
    188
    
    
    
    (2,197
    )
    
    
    2,385
    
    
    
    
    
    
    
    69
    
    
    
    (466
    )
    
    
    535Corporate and eliminations
    
    
    (7,812
    )
    
    
    (8,119
    )
    
    
    307
    
    
    
    
    
    
    
    (1,877
    )
    
    
    (2,558
    )
    
    
    681Consolidated
    
    
    (4,237
    )
    
    
    (1,137
    )
    
    
    (3,100
    )
    
    
    
    
    
    
    801
    
    
    
    981
    
    
    
    (180
    )Net loss on derivative instruments
    
    
    
    
    
    
    (13,245
    )
    
    
    13,245
    
    
    
    
    
    
    
    
    
    
    
    (2,700
    )
    
    
    2,700Loss from extinguishment of long-term debt
    
    
    
    
    
    
    (5,034
    )
    
    
    5,034
    
    
    
    
    
    
    
    
    
    
    
    (5,034
    )
    
    
    5,034Other income, net
    
    
    2,692
    
    
    
    2,247
    
    
    
    445
    
    
    
    
    
    
    
    911
    
    
    
    780
    
    
    
    131Interest expense
    
    
    (10,241
    )
    
    
    (8,321
    )
    
    
    (1,920
    )
    
    
    
    
    
    
    (3,466
    )
    
    
    (2,554
    )
    
    
    (912
    )Loss from continuing operations
before income taxes
    
    
    (11,786
    )
    
    
    (25,490
    )
    
    
    13,704
    
    
    
    
    
    
    
    (1,754
    )
    
    
    (8,527
    )
    
    
    6,773Benefit for federal and state income taxes
    
    
    (4,838
    )
    
    
    (9,121
    )
    
    
    4,283
    
    
    
    
    
    
    
    (964
    )
    
    
    (3,315
    )
    
    
    2,351Loss from continuing operations
    
    
    (6,948
    )
    
    
    (16,369
    )
    
    
    9,421
    
    
    
    
    
    
    
    (790
    )
    
    
    (5,212
    )
    
    
    4,422Loss from discontinued operations,
net of income taxes
    
    
    
    
    
    
    (132
    )
    
    
    132
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (6,948
    )
    
    $
    (16,501
    )
    
    $
    9,553
    
    
    
    
    
    
    $
    (790
    )
    
    $
    (5,212
    )
    
    $
    4,422
 24




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##### Table of Contents



Comparison of Fiscal Nine and Three-Month Periods Ended September 30, 2005, and September 30,
2004
 Revenue
     25




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##### Table of Contents



Cost of services sold
     Selling expenses
   General and administrative expenses
    26




---



##### Table of Contents



Depreciation
  Net loss on derivative instruments
      Other income, net
  27




---



##### Table of Contents



Interest expense
  Benefit for federal and state income taxes
  Liquidity and capital resources
    28




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##### Table of Contents



Future contractual obligations are as follows (in thousands):
 OperatingAs of
    
    Debt
    
    
    Broadcast
    
    
    Other
    
    
    LeaseSeptember 30, 2005
    
    Maturities
    
    
    Rights
    
    
    Obligations
    
    
    Obligations
    
    
    TotalRemainder of 2005
    
    $
    
    
    
    $
    2,079
    
    
    $
    682
    
    
    $
    251
    
    
    $
    3,0122006
    
    
    
    
    
    
    17,474
    
    
    
    5,022
    
    
    
    968
    
    
    
    23,4642007
    
    
    
    
    
    
    16,358
    
    
    
    5,259
    
    
    
    922
    
    
    
    22,5392008
    
    
    
    
    
    
    14,155
    
    
    
    2,440
    
    
    
    671
    
    
    
    17,2662009
    
    
    
    
    
    
    4,212
    
    
    
    
    
    
    
    473
    
    
    
    4,685Thereafter
    
    
    150,000
    
    
    
    3,006
    
    
    
    
    
    
    
    2,697
    
    
    
    155,703$
    150,000
    
    
    $
    57,284
    
    
    $
    13,403
    
    
    $
    5,982
    
    
    $
    226,669
  29




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##### Table of Contents



ADDITIONAL FACTORS THAT MAY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND FUTURE RESULTS
 The following risk factors and other information included in this quarterly report should be
carefully considered. The risks and uncertainties described below are not the only ones we face.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial
also may impair our business operations. If any of the following risks occur, our business,
financial condition and future results could be materially adversely affected.
 We depend on advertising revenues, which fluctuate as a result of a number of factors.
  
    
    the health of the national economy, and particularly the economy of the Northwest region
and Seattle, Washington and Portland, Oregon;
    
    the popularity of our programming;
    
    changes in the makeup of the population in the areas where our stations are located;
    
    pricing fluctuations in local and national advertising;
    
    the activities of our competitors, including increased competition from other forms of
advertising-based mediums, particularly network, cable television, direct satellite
television and radio, and the Internet;
    
    the use of new services and devices which allow viewers to minimize commercial
advertisements, such as satellite radio and personal digital video recorders; and
    
    other factors that may be beyond our control.
   We have incurred losses in the past. We cannot assure you that we will be able to achieve
profitability.
  Our indebtedness could materially and adversely affect our business and prevent us from fulfilling
our obligations under our 8.625% senior notes due 2014
  
    
    increase our vulnerability to general adverse economic and industry conditions or a
downturn in our business;
 30




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##### Table of Contents




    
    reduce the availability of our cash flow to fund working capital, capital expenditures
and other general business purposes;
    
    reduce the funds available to purchase the rights to television and radio programs;
    
    limit our flexibility in planning for, or reacting to, changes in our industries, making
us more vulnerable to economic downturns; and
    
    place us at a competitive disadvantage compared to our competitors that have less debt.
    
    limit our ability to make certain asset dispositions.
  Our operating results are dependent on the success of programming aired by our television and radio
stations.
   The non-renewal or modification of affiliation agreements with major television networks could harm
our operating results.
   31




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##### Table of Contents



We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act
of 2002. Material weaknesses in internal control, if identified in future periods, could indicate
a lack of proper controls to generate accurate financial statements.
  Competition in the broadcasting industry and the rise of alternative entertainment and
communications media may result in loss of audience share and advertising revenue by our stations.
  
    
    local network affiliates and independent stations;
    
    cable, direct broadcast satellite and alternative methods of broadcasting brought about
by technological advances and innovations, such as pay-per-view and home video and
entertainment systems; and
    
    other sources of news, information and entertainment, such as streaming video broadcasts
over the Internet, podcasting, newspapers, movie theaters and live sporting events.
   Because our cost of services are relatively fixed, downturns in the economy harm our operations,
revenue, cash flow and earnings.
  Radio and television programming revenue may be negatively affected by the cancellation of
syndication agreements.
  32




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##### Table of Contents



A write-down of goodwill would harm our operating results.
  Foreign hostilities and terrorist attacks may affect our revenue and results of operations.
  Changes in FCC regulations regarding ownership have increased the uncertainty surrounding the
competitive position of our stations in the markets we serve.
    The FCCs extensive regulation of the broadcasting industry limits our ability to own and operate
television and radio stations and other media outlets.
  33




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##### Table of Contents



We may lose audience share and advertising revenue if we are unable to reach agreement with cable
and satellite companies regarding the retransmission of signals of our television stations.
   34




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##### Table of Contents



Dependence on key personnel may expose us to additional risks.
  A reduction on the periodic dividend on the common stock of Safeco Corporation may adversely affect
our other income, cash flow and earnings. A reduction in the share price of Safeco Corporation may
adversely affect our total assets and stockholders equity.
  We will be required to make additional investments in HDTV technology, which could harm our ability
to fund other operations or repay debt.
  Failure of our information technology systems would disrupt our operations, which could reduce our
customer base and result in lost revenue. Our computer systems are vulnerable to viruses,
unauthorized tampering, system failures and potential obsolescence.
  35




---



##### Table of Contents



We may experience disruptions in our business if we acquire and integrate new television or radio
stations.
  Our ownership and operation of Fisher Plaza is subject to risks, including those relating to the
economic climate, local real estate conditions, potential inability to provide adequate management,
maintenance and insurance, potential collection problems, reliance on significant tenants, and
regulatory risks.
  Our operations may be adversely affected by earthquakes and other natural catastrophes in the
Northwest.
  36




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##### Table of Contents



ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
  Interest Rate Exposure
  Marketable Securities Exposure
  
 ITEM 4  CONTROLS AND PROCEDURES
   37




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##### Table of Contents




    
    On October 4, 2005, we announced the appointment of Colleen B. Brown as president and
chief executive officer effective October 10, 2005, and that Benjamin W. Tucker, who had
been our acting president and chief executive officer, would leave the Company in October
2005.
    
    Effective September 2005, we combined certain finance, accounting, and human resources
functions at our Seattle, Washington headquarters to provide for more centralized
administrative operations for our operations and personnel located in Seattle.
    
    Effective October 2005, we implemented a new, centralized payroll and human resources
system.
  38




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##### Table of Contents



PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  3.1
    
    Amended and Restated Bylaws of Fisher Communications, Inc., effective July 28, 2005
(incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K dated
August 2, 2005).10.1*
    
    Employment Separation Agreement with Kirk G. Anderson dated July 1, 2005 (incorporated
by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K dated August 9,
2005).10.2*
    
    Change In Control Severance Agreement with Colleen B. Brown dated October 10, 2005
(incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K
dated October 3, 2005).10.3*
    
    Employment Offer Letter to Colleen B. Brown dated October 3, 2005 (incorporated by
reference to Exhibit 10.2 to the Companys Current Report on Form 8-K dated October 3,
2005).10.4*
    
    Employment Separation Agreement with Benjamin W. Tucker dated October 3, 2005
(incorporated by reference to Exhibit 10.3 to the Companys Current Report on Form 8-K
dated October 3, 2005).10.5*
    
    Form of Non-Qualified Stock Option Contract under the Fisher Communications Incentive
Plan of 2001 (incorporated by reference to Exhibit 10.1 to the Companys Current Report on
Form 8-K dated October 13, 2005).10.6*
    
    Form of Restricted Stock Rights Agreement under the Fisher Communications Incentive
Plan of 2001 (incorporated by reference to Exhibit 10.2 to the Companys Current Report on
Form 8-K dated October 13, 2005).31.1
    
    Certification of Chief Executive Officer.31.2
    
    Certification of Chief Financial Officer.
 39




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##### Table of Contents



32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 * Management contract or compensatory plan 40




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##### Table of Contents



SIGNATURES
  FISHER COMMUNICATIONS, INC.(Registrant) Dated: November 8, 2005
    /s/ Robert C. BatemanRobert C. BatemanSenior Vice President and Chief Financial Officer 41




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description3.1
    
    Amended and Restated Bylaws of Fisher Communications, Inc., effective July 28, 2005
(incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K dated
August 2, 2005).10.1*
    
    Employment Separation Agreement with Kirk G. Anderson dated July 1, 2005 (incorporated
by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K dated August 9,
2005).10.2*
    
    Change In Control Severance Agreement with Colleen B. Brown dated October 10, 2005
(incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K
dated October 3, 2005).10.3*
    
    Employment Offer Letter to Colleen B. Brown dated October 3, 2005 (incorporated by
reference to Exhibit 10.2 to the Companys Current Report on Form 8-K dated October 3,
2005).10.4*
    
    Employment Separation Agreement with Benjamin W. Tucker dated October 3, 2005
(incorporated by reference to Exhibit 10.3 to the Companys Current Report on Form 8-K
dated October 3, 2005).10.5*
    
    Form of Non-Qualified Stock Option Contract under the Fisher Communications Incentive
Plan of 2001 (incorporated by reference to Exhibit 10.1 to the Companys Current Report on
Form 8-K dated October 13, 2005).10.6*
    
    Form of Restricted Stock Rights Agreement under the Fisher Communications Incentive
Plan of 2001 (incorporated by reference to Exhibit 10.2 to the Companys Current Report on
Form 8-K dated October 13, 2005).31.1
    
    Certification of Chief Executive Officer.31.2
    
    Certification of Chief Financial Officer.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 * Management contract or compensatory plan 42